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ICICI Securities Report
Garden Reach Shipbuilders & Engineers Ltd. has reported impressive Q1 FY21 earnings despite complete closure of operations in H1 Q1 FY21.
Gross margin came in at 58.4% against 53.2% QoQ and 71.6% YoY. This is indeed impressive given that revenues were down 76% QoQ. Garden Reach Shipbuilders and Engineers has been able to manage subcontracting expenses quite well against the backdrop of revenue decline.
Ebitda margin was impacted by sticky employee costs at 58% of topline in Q1 FY21 leading to a negative Ebitda of Rs 404 million. Company’s shipbuilding orderbook is currently at approximately Rs 262 billion and enjoys approximately 21 times ‘book to bill’ ratio.
Revenues should increase substantially from FY22E leading to margin expansion on the back of operating leverage. Company has unveiled two key projects: to increase capacity for P17A, Anti Submarine Warfare Shallow Water Craft (ASWSSWC) and survey vessel (large).
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